Google's next prey

Cyberspace giants Google, Yahoo and eBay are circling around the media-buying industry to see if they can take over from traditional offline agencies to become brokers for the ad sales of radio, television and print media.

by Knowledge@Wharton

They intend to bring together buyers and sellers in online auctions in the same way they sell internet ads for themselves and others.

Currently, Google is testing ad sales for a group of more than 50 newspapers, including the Washington Post and New York Times. Whilst the growth of advertising on the internet is high at 30% a year, it is not surprising that companies like Google want to grab a share of the offline advertising market as well -- in the US alone it is worth $150 billion compared to $16 billion for online advertising.

Wharton professor Leonard Lodish says: "What advertisers want to have happen is the commoditisation of media time so that it becomes a more transparent market [that is] sold to the highest bidder."

However, Wharton professor David Schmittlein says the new online players may have only a marginal impact on offline advertising because large advertisers are served by two of the biggest media-buying firms - Simmons Market Research Bureau and Mediamark Research, which give their clients discounts.

They also have market research capabilities which sets them apart from their online rivals. However, Schmittlein says the bigger worry for traditional media players would be if an online predator acquired one of the two big offline media firms.

Online companies want a piece of old-style media business
29 November 2006 
Reviewed by Morice Mendoza

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